E-cigarette prices to soar as EU moves to reclassify as tobacco product to raise tax

The controversy over e-cigarettes continues. This time however it has nothing to do with its health implications. The European Union is set to classify e-cigarettes as tobacco products in a bid to help member states raise more money.

Ambassadors from all the 28 EU countries have agreed to take the first step towards imposing the higher duty and have, according to The Times, "quietly" told the European Commission to come up with plans by next year to reclassify e-cigarettes as tobacco products for tax purposes.

Under the current tax regime, the duty must make up at least 57% of the retail price of a packet of cigarettes in addition to VAT. At present, e-cigarettes are subject to a standard VAT of 20%. This means a £23 e-cigarette that resembles a standard cigarette will cost more than £53 if taxed as a tobacco product.

In December, the European Commission recommended developing plans for "including e-cigarettes in the scope of excise duty on tobacco products", warning that a failure to act "might have significant long term budgetary implications for member states." And last week, the council agreed the need to consider creating a category for vapes in the tobacco tax directive. The excise duty to be imposed is now being decided.

The decision is expected to be ratified by EU finance ministers on 1 March. The ambassadors who agreed to the move said it was aimed at reducing "legal uncertainty, hamper substitution by borderline products and avoid possible different approaches in member states."

The plans will be put forward for public consultation. The Times noted that this will pave the way for a lobbying battle. It said a previous tobacco projects directive was described as "the most lobbied dossier in the history of the EU." Under those rules which take effect in May, e-cigarettes that have not be licensed as stop-smoking medicines will be limited in size and strength and advertising will be banned.

Tobacco companies led by Philip Morris International tried to have the tobacco products directive watered down. On the far end, pharmaceutical giants led by GlaxoSmithKline sought tougher laws.

What is clear however is that there are other lobby groups against the move. Deborah Arnott from the health charity ASH, said: "If the EU were to require member states to tax electronic cigarettes like tobacco products it would be seriously detrimental to public health. It would lead to increased prices and discourage smokers from switching."

Public Health England has estimated that e-cigarettes are 95% less harmful than cigarettes. It is pushing the National Health Service to recommend them. However, some doctors and public health experts however remain sceptical and instead have pushed for tougher regulations.

This is not surprising given that there are various studies on the health implications of using e-cigarettes. A study from Hong Kong showed that e-cigarettes contained a million times more cancer-causing substances than outdoor air.

About 2.2 million people in the UK rely on e-cigarettes as a substitute for regular cigarettes. Lorien Jollye, a vaping activist warned that a tax rise would put people off from trying to stop smoking. "There is something very unsettling about financially punishing people for giving up smoking."